Big payouts for Goldman partners as profits soar

Partners in Goldman Sachs are in line for sharply increased cash bonuses following another surge in pre-tax earnings in the first quarter of the bank's financial year.

In a private briefing at the firm's Wall Street headquarters, its senior partner and chairman, Jon Corzine, reported that earnings for the quarter ending 29 February soared to $565m (pounds 367m), a threefold increase on earnings of the same quarter a year ago.

The stellar performance provides further evidence of the turnaround in the fortunes of Goldman Sachs, the last big private partnership on Wall Street. In common with most of the industry, the bank took a beating in 1994 thanks largely to rising interest rates and a depressed bond market. Mr Corzine took over at the end of 1994 when the firm was at its lowest ebb.

It was the fifth consecutive quarter to show improving earnings and the firm's fourth most profitable quarter ever. Because of its status as a partnership, it is impossible to estimate after-tax earnings. The 174 partners are taxed on their individual shares in the firm'sprofits.

"It was a very positive quarter for all divisions, there was very consistent profitability," one partner who was at the briefing told the New York Times.

Mr Corzine noted recently: "We have had favourable markets; we have had a relatively attractive environment to execute a turnaround". He has been credited with returning Goldman Sachs to health after the setbacks of two years ago, scaling back the firm's operating expenses and making cuts in the workforce.

Only weeks ago, Goldman Sachs was agonising over a proposal finally to abandon its partnership model and to go public in an attempt to reinforce its capital base. The plan was rejected, however, after a large number of its junior partners objected that they would be unfairly penalised by such a move.

Financial statements due to be published shortly are expected to show a healthy increase in of the firm's capital from $4.9bn on 30 November last year to well over $5bn at the end of February.

Total revenue in the first quarter reached $1.464bn while expenses - mostly in the form of the partners' earnings - also climbed to $899m. For the same quarter a year ago, revenue was $906m and costs $746m.